The Australian Communications and Media Authority’s (ACMA) crackdown on phone scams has led to telco Circles Australia Pty Limited (trading as Circles.Life) paying a $199,800 infringement notice for failing to undertake required customer identity checks. The company has also offered over $100,000 in compensation to consumers who had their services compromised by scammers who took advantage of these lapses.
An ACMA investigation found 1,787 contraventions of industry rules for phone number transfers using Circles.Life SIMs purchased from retail stores between August and December 2021. As a result, 42 consumers experienced fraud-related issues such as compromised emails accounts and loss of access to banking accounts. At least 7 of these consumers experienced financial losses.
ACMA Chair Nerida O’Loughlin said that the multi-factor identification rules are designed to prevent these types of fraud – and the rules work when telcos comply.
“Since the rules were introduced by the ACMA in 2020, there has been a significant drop in mobile fraud reported to banks and government agencies.”
“It is deeply concerning that Circles.Life did not have proper processes in place for such a long period and that so many people were affected or put at risk of identity theft and fraud,” Ms O’Loughlin said.
“Combatting these types of scams requires concerted action by all telcos and one weak link exposes all consumers to harm.”
“It is the customers of other telcos who have fallen victim in this case by having their number transferred to Circles.Life without their knowledge.”
Ms O’Loughlin said that while the breaches should not have occurred, Circles.Life had responded quickly once it was aware of the problem by implementing the required identity checks, appointing regulatory staff to oversee its activities and providing some recompense to the 42 affected consumers.
“Some of the victims have experienced significant stress due to Circles.Life’s failure and we are pleased to see the company is providing recompense to acknowledge the profound emotional toll and disruption often caused by these scams.”
Combating SMS and identity theft phone scams is a current ACMA compliance priority. Where the ACMA finds non-compliance, telcos can expect strong action including potential commencement of Federal Court proceedings and pursuit of significant civil penalties.